The Hidden Taper?

January 21, 2021

With everything that has happened in the world over the last 12 months, it would be easy to have missed a crucial change in pensions legislation that took effect from 6 April 2020.

The standard annual allowance (the amount that can be paid into a pension with tax relief) is £40,000. The Tapered Annual Allowance (TAA) is designed to limit the amount that high earners can contribute.

From 6 April 2020, for those on the very highest incomes, the minimum level to which the annual allowance can taper down reduced from £10,000 to just £4,000. This reduction affects individuals with a ‘Threshold Income’ of £200,000 (increased from £110,000 in 2019/20) but this is income from all sources, not just employment. If your total income is near to, or above this level, it is important to understand your exposure to the TAA to avoid incurring an unexpected tax charge; the calculations can be complex so you may need to seek guidance. More information can be found in this video.

There are a number of options that can be considered to alter the impact of the TAA. Please do not hesitate to contact us at EBCam if you have any questions email

Cambridgeshire Chambers of Commerce